Tom Poje

so the person also receives a 1099R for $10,100, because that indicates the total amount of distribution as well?

therein lies the problem Mr Cline: I could point to the regs and say, this clearly states "Limit comp to the comp limit". there is nothing that tells you "Oh, by the way, it is a snap shot at the end of the year" as Weddell points out, it is 'informal' pieces of guidance we rely on. That is why I really appreciate the comment being in the preamble. The caped Simpson makes a good point, but then he probably had to stay after school and write on the board 100 times....

all kidding aside, I don't think there is anywhere in the code or the regs that 'specifically' states this concept, though it is considered common knowledge for most in the industry. it is actually nice that there is something in writing, even if it is only in a preamble.

See John See John show auditor copy of preamble to 415 regs. See John make auditor read this portion of the 415 regs page 13 of the pdf “As noted above, the final regulations provide that a plan cannot take into account compensation in excess of the section 401(a)(17) limit. In addition, the final regulations provide that elective deferrals can only be made from compensation as defined in section 415©(3). However, in applying these two rules, a plan is not required to determine a participant’s compensation on the basis of the earliest payments of compensation during a year.” see John make auditor read last sentence 100 times, and stand in the corner 415 regs.pdf

well, under Publication 4810 which specifies the requirement for the layout for electronic submission find anywhere at all where there is a place specified for including an electronic signature or otherwise or must be included somehow, in some way shape or form. in addition, vendors such as FT William which carry the blurb as part of their instructions: Electronic Filing Process Requires No Signature Paper Form 8955-SSAs must have the plan administrator and plan sponsor sign the bottom of page 1. However, if the plan administrator and plan sponsor are the same person, then only the plan administrator need sign. At this time, there are no signing requirements to e-sign. However, it is good practice to send the completed form (on paper or pdf) and ask clients to review, sign and keep a paper copy for their records. would have received at least one (maybe 2) IRS complaints for not requiring signatures since 2009. (well, ok, maybe the IRS has yet to look at any form 8955-ssa that were filed electronically and have only sent out late notices on forms that have been filed on paper.

let's say I have 1 employer with 2 companies, company A and Company B by chance, company A consists of all field employees and Company B consists of all other employees. each has it's own plan. How would you test? (There is certainly nothing to prevent you from setting the plan up that way - and testing by aggregating the plans or testing each plan separately, or for that matter, having one plan and breaking it up into component plans)

if someone is eligible to receive a match (doesn't matter whether they defer) they are includable and benefiting for the 401(m) portion. if by chance you have an after tax account that still accepts contribution they are includable and benefiting regardless of hours or last day provision for the match

at the 2012 ASPPA Conference Q and A 40 a similar question was asked The fiduciaries of a safe harbor 401(k) plan decide to change the trustee during the plan year. An amendment is adopted to reflect the change in trustee. Is this amendment permissible? asppa: Yes, you could amend IRS response: Agreed

I've never seen it addressed, I'd lean toward including. (being consistent, since they were included in the ADP test) again, the document probably says use W-2 comp, and for me, as I noted above I'm using comp/hours that fall within the plan, not the comp/hours within the calendar year. If you go buy a 'strict' reading of the regs...(I don't have a copy sitting in front of me since I'm not at the office) probably says something like "has not performed service within 12 month period" but how exactly that should be interpreted is probably debatable. what is the intent of the regs? I'd lean toward "not performed service in the plan year" if only my name was "But what do I know" I'd feel a lot better.

if you don't include those people, then, as you note, you have deferrals that would never have been tested, which makes no sense. as a general rule, since a document says use W-2 comp, you include comp in whatever year paid. depending on your document you 'could' count the comp in the 'year earned' below is a sample language from Accudraft, this in particular came from their 415 good faith amendment. If you checked that item then you would count it in the prior year. that means of course, when you ask for comp from the client you would also have to ask for 'the last paycheck comp' not a lot of fun. I always viewed things as plan year runs 1/1 - 12/31 and comp runs from something like 12/28 - 12/26 or whatever - the W-2 that falls within the plan year. you do that now on all active people (I) Compensation Earned in Limitation Year but Paid in Next Limitation Year. If this paragraph (I) is checked, then effective as of the first day of the first Limitation Year beginning on or after July 1, 2007, Code §415©(3) Compensation for any Limitation Year will include any amounts earned during that Limitation Year but not paid during that Limitation Year solely because of the timing of pay periods and pay dates if: (i) these amounts are paid during the first few weeks of the next Limitation Year; (ii) the amounts are included on a uniform and consistent basis with respect to all similarly situated Employees; and (iii) no Code §415©(3) Compensation is included in more than one Limitation Year.

and I should have added, just in, you can't split into component plans to avoid the gateway minimum

one way of looking at it that might help instead of thinking it as component plan testing pretend you have 2 separate plans, one covering one group and another covering everyone else. and you are testing on a disaggregated basis. As John indicated, you have 1 avg ben pct test. and then otherwise when looking at one plan, everyone else is treated as includable and not benefiting and vice versa. If using Relius you run the avg ben pct test to determine if plan pass/fails then, you code people in 2 divisions - e.g. allocation group and accrual group. when testing the allocation group (select that divisions) and enter number of HCEs / NHCEs non benefiting non excludables from the accrual group and do the same for the accrual group (vice versa) make sure to answer average benefits percentage test pass or fail. since it is Component Plan testing I guess you could name one division CP1 and the other CP2. In fact you could actually have as many groups as you want as long as no one is in more than one. but then if you were really crazy and set up 30 groups, the last one would be CP30..........

I am going to guess you are using the term 'coverage' test rather loosely, and simply mean "Can I test the plan separately, but then when splitting up the 'refund' I have to do it across the board." I read EPCRS to say you can't disaggregate the plan for testing under 1-1 correction, which of course most likely produces a larger value to be corrected. pretty nasty. "...Under this correction method, a plan may not be treated as two separate plans, one covering otherwise excludable employees and the other covering all other employees"

and lobby fees to push this through? (I didn't imply something did I?)

Ft William only wants 'A' people - they changed their check for 2013.

here was an article on the issue from the Benefits Link newsletter http://blog.heritage.org/2014/05/15/qa-americans-join-retirement-plan-members-congress/

note, this also includes form 8955-ssa http://us.practicallaw.com/0-567-8745 Notice 2014-35 ERISA and the IRC provide penalties for the late filing of a Form 5500 series return and other information. The DOL's Delinquent Filer Voluntary Compliance (DFVC) Program allows plans that fail to timely file their annual reports to admit to noncompliance in exchange for reduced penalties (see Legal Update, DOL Notice Updates Delinquent Filer Voluntary Compliance (DFVC) Program). Benefit plans participate in the program by filing an application and submitting the late annual reports. Under Notice 2014-35, the IRS will not impose penalties under IRC Sections 6652(d), 6652(e) and 6692 for a plan's late filing of a Form 5500 series return (including Forms 5500, 5500-SF or 8955-SSA) or an IRC Section 6059 actuarial report, for a year for which one of these forms must be filed, if the person..... last paragraph of article By linking the IRS' penalty relief procedures to the DOL's DFVC Program, Notice 2014-35 gives late filers of Form 5500 Series returns an incentive to participate in the relief programs of both agencies. However, plan administrators and sponsors participating in both programs should be sure to submit Form 8955-SSA on paper with the IRS for the year at issue, even though the DFVC program requires Form 5500 series returns to be filed electronically using the EFAST2 system.

as explained in the IRS notes http://www.irs.gov/pub/irs-tege/epn_2014_7.pdf

Q 39 at the 2012 ASPPA Conference: A safe harbor 401(k) plan fails the §410(b) coverage with respect to its profit sharing plan component. Within 9-1/2 months after the close of the plan year, the employer adopts a corrective amendment, pursuant to Treas. Reg. §1.401(a)(4)-11(g). Does this amendment cause the 401(k) component to lose its safe harbor for the plan year in which the corrective amendment is adopted? ASPPA suggested answer No. Regardless of the position taken by the IRS with respect to amendments made to a safe harbor 401(k) plan, an implied exception exists for any amendments that are necessary to correct a violation of the nondiscrimination testing rules, which is a fundamental requirement for a qualified plan. The IRS agrees with the proposed answer.

a discretionary match to be safe harbor must be capped at 4%. one example would be a 66.67% match up to 6% of comp, which would = 4% of total comp

obviously this won't necessarily speak for others, but I was curious, and looking at a Great West Statement it shows gross distribution = 3112.15 fee = 50 withholding = 612.43 (which would be 20% of gross less fee) state withholding = 122.49 (which was 4% of gross less fee) .... the idea of withholding is the govt want to makes sure they get their cut. I think the ERISA Outline Book says if there was no withholding as required they could go after the one cutting the check to recover the tax if they couldn't get it from the participant. I guess, lets say as the investment house you cut a check for 100,000 and don't withhold the required 20%. the individual takes the $ and flees the country. so someone is going to have to make up for the missing withholding. otherwise I agree with ESOP guy, withholding is just that. it is at tax time when everything balance based on the 1099/

well, what is going to go on the 1099 as the distribution amount? if there was a balance of 1050 and a fee of 50 I would expect the 1099 to be 1000 and at that point I would expect 200 in withholding.

no. but if you toss in a 1 year wait for safe harbor then you lose you "get out of top heavy free" card.

well, the instructions for the 5500 says (sched H): Line 2f. top Include on this line all distributions paid during the plan year of excess deferrals under Code section 402(g)(2)(A)(ii), excess contributions under Code section 401(k)(8), and excess aggregate contributions under Code section 401(m)(6). Include allocable income distributed. Also include on this line any elective deferrals and employee contributions distributed or returned to employees during the plan year, as well as any attributable income that was also distributed. ........................ if you have shown them as a payable, then you can't really shows them as a distribution the year they occur. The auditors once wanted me to show it as payable and I argued I needed to wait and show it as a distribution the year it was actually made. Not often I 'win', but they accepted the argument.

well last week the florescent light bulb frazzled in my office and that smelled bad, really bad and I would say Bird is correct, this smells, and maybe worse. I think someone once said you take a 'photograph'. you simply have a scenario where some people (HCEs) with < year of service get something and other people(NHCEs) don't. The ERISA Outline Book 8 VIII C says "When a plan has more than one set of eligibility requirements....the plan has 'dual eligibility'. the exclusion rule applies to the lowest age/service requirements applicable to any employee benefitting under the plan. (emphasis is the Book) so I don't see how you can get around a coverage failure. Again, under the otherwise excludable rule, I test those with 1 year of service (no one) and those with less than 1 year. that is everyone, but amongst the everyone you have HCEs receiving and NHCEs not.